A company is doing an IPO underwritten by an investment bank. The company plans to issue 500,000 ordinary shares. The investment bank offers stand-by underwriting at a spread of 8%. The issue price is set at $5 per share. On the IPO day, the company only received subscriptions of 95% of the total number of shares offered. a) What are the total proceeds from the IPO? Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) b) How much does the company expect to receive from the IPO? Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) c) How much does the investment bank expect to receive from the IPO? Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) A company needs to raise $1,800,000 (this is the gross amount before any cost comes off) for a business expansion. The company decides to issue shares to the market at $6 per share. The shares are underwritten at $4.8 per share. The out-of-pocket expenses are $150,000 in total. The market share price increased by 15% right after the IPO. a) Calculate the number of shares sold in the share offering. Do not include the unit. Do not use comma separators. E.g. 123456 (1 mark) b) Calculate the total underwriting spread in dollars. Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) c) Calculate the total underpricing of all shares sold in the share offering. Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) d) Calculate the total cost for the IPO. Round your answer to the nearest dollar. Do not include the $ symbol. Do not use comma separators. E.g. 123456 (1 mark) Jodie purchases a bond today. She has the following expectation on the return of the bond over the next year. Probability Bond return 25% 5% 45% 2.5% 30% -1.5% The overall expected return for the bond over the next year is 1.925%. Which of the following can be used to calculate the standard deviation of the bond over the next year? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.) Select one or more: a. None of the options can be used to calculate the standard deviation of the bond over the next year. b. 25% * 5% + 45% * 2.5% + 30% * (-1.5%) C. 25% * (5%)2 + 45% * (2.5%)2 + 30% * (-1.5%)2 1.9252 d. /25% *(5% 1.925%)2 + 45% * (2.5% - 1.925%)2 + 30%* (-1.5% 1.925%)2 e. 25% * 5% + 45% * 2.5% + 30% * (-1.5%)
